The Value of Customer Service Management for Service Providers

A Closer Look at the Commissioned Forrester TEI Study on the Cost Savings and Benefits of Using Customer Service Management at a Communication Service Provider

Solving customer problems, making it easy for everyone to find the information they need, and meeting SLAs: These capabilities might seem like table stakes for a service provider’s customer service program. Yet for many providers, they’re out of reach because of fractured platforms, siloed knowledge bases, and costly legacy systems.

Service providers looking to improve customer service delivery have turned to ServiceNow Customer Service Management to centralize support systems, reduce costs, and boost productivity. But what is the return on investment (ROI) of the solution? How can a service provider quantify what deploying Customer Service Management might mean in financial terms to their organization?

ServiceNow commissioned Forrester Consulting to find out and conducted a Total Economic Impact™ (TEI) study at a communication service provider on the ROI realized by standardizing on ServiceNow Customer Service Management.

Guest speaker Sean Owens, Principal Consultant, Total Economic Impact Practice, Forrester Consulting, presented the study’s key findings in a recent webinar. Here are some of the key takeaways from the ensuing Q&A:

The study found that one provider saved $15.6 million in support costs by reducing support calls and increasing self-service. How do we achieve these kinds of benefits?

First, you need to look at all the support channels in place at your organization and determine what each one costs. For example, before deploying ServiceNow, the provider had a mix of support calls coming in from phone, web (or portal), and email. The phone made up 60% of the calls, the web was 35%, and email was 5%; a phone call cost $30, while the web cost $23, and email cost $27.

Next, you need to identify which channels are the most efficient for your business and which are the simplest and most convenient for your customers. Ideally, they will be one and the same. Then, you need to employ strategies that help move usage away from the most expensive channels, to the ones that are the simplest to use and maintain, such as the web. The provider was able to shift a number of contacts from phone to a customer service portal, essentially saving $7 (the difference in phone and web contact costs) per contact, which ultimately added up to a significant savings.

While you may not have email in the mix, you may have chat and social media channels. Any changes — including a new customer service management solution that can now manage all your support channels — should help you divert traffic to more efficient channels and drive down costs per contact for each channel.

My organization is not a telecommunications provider, do the findings still apply?

Yes, because everyone deals with customer support. The content of those contacts and the volume of more complicated contacts that require escalation will differ, but all organizations should strive to provide efficient and useful support to their customers. Any process changes or technology solutions that enable customer service agents to resolve issues more accurately and quickly mean that customers are happier (or at least less likely to be angry or frustrated). They may be more likely to purchase again or less likely to leave for a competitor.

So, if you are in IT services, the retail industry, in another commercial business, or perhaps even in the public sector, the themes addressed in the TEI study can help. For some, it may be a matter of simply adjusting some of the input metrics: the cost per contact, the amount sold per transaction, or the cost of service-level agreement upkeep. For those in the public sector, there are probably a few more steps that will depend on your situation. For example, there may not be upsell opportunities here, but there are opportunities to complete more service contact requests and avoid other costs.

How do you measure success with Net Present Value (NPV) and Return on Investment (ROI)? 

The short answer is any NPV over $0 usually indicates a good (successful) investment and any ROI over 0% a positive return. The explanation of why requires a little more detail: 

NPV takes a series of cash flow values over time and summarizes them in a single number that reflects “today’s dollars.” It assumes a dollar you earn today is worth more to you than a dollar earned in a year, because you can spend or invest it now. Similarly, a dollar spent today is more costly than a dollar you spend next year, because you can use or invest that money for an extra year.

The NPV equation uses a discount rate, as a percentage, to account for how much more today’s dollar is worth than next year’s dollar. Forrester Consulting TEI projects use a 10% rate. Ultimate, an NPV of more than $0 is a positive investment. Note, any decisions on whether or not to invest in a project with a lower or higher NPV is subjective. You may need to consider additional factors, such as the size of the project, your business, and other strategic or unquantified benefits.

ROI is the ratio of net benefits and total costs. So, anything over 0% reflects a positive return on your investment, and higher ROIs indicate a project that will likely be more successful. There is no exact ROI value to decide whether or not to invest in a project or not — it depends on a variety of factors including the project scope, your industry, and your organization’s appetite for risk. But any ROI with three digits should be a strong contender.

To learn more about how service providers can improve customer satisfaction, reduce SLA penalties, increase agent productivity, and reduce reliance on costly legacy systems with ServiceNow, check out the full Forrester TEI study and the webinar.